Volkswagen plans all-electric car for China next year

by JOE McDONALD, Associated Press

Volkswagen is developing a new fleet of electric vehicles that will start full production in 2020. At the 2017 Shanghai international auto show, Volkswagen will reveal the I.D. CROZZ, its first electrically powered crossover utility vehicle. (Image courtesy of Volkswagen of America)

SHANGHAI (AP) —

Volkswagen, Europe's biggest automaker, plans to launch its first pure-electric car in China next year as Beijing steps up pressure on the industry to promote alternatives to gasoline.

The announcement Tuesday comes on the eve of the Shanghai auto show, which showcases industry efforts to create electric models with consumer appeal. General Motors Co.'s Buick unit and Ford Motor Co. also have announced new electric vehicles for China this year.

The VW model will be the first in a range of electric vehicles in China, said Jochem Heizmann, head of VW's China unit. It is due to be produced under a new brand name with a local partner, state-owned Jianghuai Automotive Corp.

"This will be a new cooperation on pure battery cars," said Heizmann. "Our challenging target is to come, already next year in 2018, to the market with the first car."

China has the world's most aggressive electric car goals. Communist leaders are promoting them to clean up smog-choked cities and in hopes of taking the lead in an emerging technology.

Regulators have jolted the industry with a proposal to require electrics to account for at least 8 percent of each brand's production by next year.

At the auto show, the global industry's biggest marketing event of the year, almost every global and Chinese auto brand is showing at least one electric concept vehicle, if not a market-ready model.

Heizmann said VW, which vies with GM for the title of China's top-selling automaker, expects annual sales of at least 400,000 "new energy vehicles" — the government's term for electric or gasoline-electric hybrids — by 2020 and 1.5 million by 2025.

The plan to create a new brand for the VW-Jianghuai partnership follows an approach taken by Mercedes-Benz, GM and Nissan Motor Co. Foreign brands are under pressure from Chinese regulators to help local partners create indigenous brands.

Despite government subsidies and other encouragement, electric cars have yet to catch on with China's driving public due to concern about their limited range. Most Chinese automakers sell plug-in battery models but their range is usually no more than 120 to 150 kilometers (75 to 95 miles) — too little to attract most buyers.

Sales of electric and gasoline-electric hybrids fell 4.4 percent from a year earlier to 55,929 vehicles while sales of SUVs rose 21 percent to 2.4 million.

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Heizmann said the industry needs to find a way to create electric models that appeal to consumers. He said VW was trying to do that by developing vehicles for different market segments.

"You have to achieve cars which are competitive," he said.

To encourage foreign automakers to help develop China's electric vehicle industry, regulators have allowed them to form additional joint ventures with local partners on top of the two that are allowed for traditional gasoline-powered vehicles.

That allowed Volkswagen to create its partnership with Jianghuai alongside ventures with two other state-owned automakers.

Heizmann said foreign manufacturers also are no longer required to hand over electric technology to Chinese partners. He said VW's venture with Jianghuai involves jointly developing the product.

"We will be fast. We will use their technology. We will put in some of our own technology and experience," he said.

Heizmann said Volkswagen's luxury unit, Audi, is coming to market with a plug-in electric version of its A6 sedan that can go 50 kilometers (35 miles) on one charge.

In its next stage of development, VW plans to produce a version of its Golf for China with a 300 kilometer (185 mile) range, Heizmann said. He said plans then call for vehicles designed from scratch for pure-electric propulsion with a range of 500 kilometers (300 miles) or more.

Beijing also is steadily tightening fuel efficiency and emissions standards, which Heizmann said are on track to become the world's most stringent. He said that will narrow the "cost gap" between electrics and gasoline by requiring more expensive technology for internal combustion while batteries should get cheaper.

At the same time, Heizmann said Volkswagen and its Audi and Skoda brands also are aggressively promoting SUVs. He said the brands plan to roll out a total of 10 new locally produced SUVs over the next two years.